Bank Automation Advantages and Disadvantages Bank Automation Advantages and Disadvantages LaRon Walker Master of Information Technology

and Internet Security October, 2009 Automation can be a very powerful tool in any industry. The banking industry is no exception, no matter if the bank is small or large. By using an automated information system, businesses can greatly reduce the risks of human error, along the overall operation costs of the business. In mid-tolarge size banks, automation could help processes become more efficient, as well as help customers


become self sufficient in processing their own transactions, with minimal human interaction. This could help reduce costs in the areas of HR (hiring), employee training, purchasing (office equipment), and physical office overhead. In a mid-to-large banking environment, an automated business strategy would help streamline processes, which could in turn increase productivity of each employee. However, when implementing any new system, the return is not necessarily immediate. There are investment costs involved that must be considered. These costs include, but are not limited to time, training, equipment (hardware and software), and initial implementation funding. Per Jankowski (2006), electronic payments now dominate non-cash payments in the United States. This is highly due to automation systems, and the innovation of strong payment infrastructures enabled by the ever-evolving E-commerce and the creation information systems. The banking industry is in the center of this digital realm, and transactions between B2C, B2B and C2C businesses increase daily. Without a solid automation process, banks would be forced to constantly invest funds in hiring and training personnel, to keep up with this demand. Also, without automation, banks would be forced

Bank Automation Advantages and Disadvantages to constantly invest in Fraud and Risk Management departments, to investigate issues and balance the


risk of human theft or mistakes. Overall, without some type of automation process in place to help with the overall volume, the amount of transactions that are processed in today s digital world would not exist. Switching to an automated system is a double-edged sword. Advantages include more efficiency, less opportunity for human mistakes, and overall lower operation costs. The disadvantages are not so apparent. For instance, an automated process is generally put in place to make processes faster, which reduces the cost per transaction. But what most fail to realize is, the more we rely on computers and these systems, the less the need for humans to perform these tasks. This takes away jobs, which adds to the failing economy. Also, as we shift to more self-serving virtual environments, the more secluded consumers may feel, and may eventually lose sight or the necessity for human interaction. This is not saying that banks would lose the total need for humans, but this is clearly a strategy that could help future decisions pertaining to budget cuts and restructuring. References Jankowski, C. (2006, September 23). Investing in payment innovations: Risks and rewards. Chicago Fed Letter; Sep2006 Supplement, 230b(1-4), 4. Retrieved October 25, 2009, from EBSCOHOST MasterFile Premier database. Laudon, K., Laudon, P. (2010). Management Information Systems Managing the Digital Firm (11th ed.). Upper Saddle River, NJ: Prentice Hall.

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